Does Innovating Enable Firms to "Break the Rules"?

CHICAGO, Jan. 29, 2013 /PRNewswire/ -- Findings from this research show that innovative firms can use unconventional marketing strategies without incurring the penalties (e.g., less favorable attitudes and purchase intentions) incurred by competitors that are not viewed as innovators.

Why do some firms receive a backlash from consumers for employing marketing strategies that deviate from those that consumers view as being conventional and acceptable in a market while other companies are not penalized for using such approaches? The current research shows that when a company has developed a reputation for being innovative, it builds up a form of brand equity referred to as "innovation credit." Possessing innovation credit is important because it fundamentally affects how consumers view a firm's marketplace transgressions (i.e., using unconventional marketing strategies). Specifically, the firm's reputation as an innovator provides consumers with a basis for perceiving that its use of unconventional strategies will, consistent with its past innovation efforts, create additional benefits to the market.

The authors show that when a firm violates convention in an area of marketing strategy (e.g., advertising) that is different from that in which it has developed an innovative reputation (e.g., new product development), innovators escape the penalty consumers place on firms that lack an innovative reputation. When a firm's innovative reputation and its marketplace transgression arise in the same area of strategy, consumers may even reward innovative brands (in the form of more favorable brand evaluations) for "breaking the rules." These results appear in the January 2013 issue of the American Marketing Association's Journal of Marketing.

The authors, Michael Barone and Robert Jewell, write that these "results provide a rationale for managers to adopt in championing new offerings (particular those that are radically new) within their firms." By more broadly defining the range of potential benefits a firm can reap from its innovation efforts, the notion of innovation credit provides a broader and more nuanced perspective for assessing the return on investment associated with its innovation strategies.

As shown by the results of this research, a brand's investment in innovation has fundamental and important implications regarding its ability to effectively utilize a wider range of strategies than the competition, including the use of approaches not normally employed by its competitors. When considered along with results demonstrating a penalty for non-innovative brands that use unconventional strategies, innovation credit can preserve and enhance the advantages innovators enjoy over the competition.

About the AMA

About the American Marketing Association:The American Marketing Association (AMA) is the professional association for individuals and organizations who are leading the practice, teaching, and development of marketing worldwide. Learn more at marketingpower.com.